When a market is not in equilibrium:
A)total surplus is not maximized.
B)there are no exchanges that can make some better off without someone becoming worse off.
C)the market is efficient.
D)All of these are true.

Question

Quizplus · Accepted Answer

When a market is not in equilibrium, it means that either the quantity demanded is greater than the quantity supplied or vice versa. This results in an inefficient allocation of resources, where some potential gains from trade are not being realized. Therefore, total surplus is not maximized. Option B is incorrect because there may still be exchanges that can make some better off without someone becoming worse off, but not all possible gains from trade are being achieved. Option C is also incorrect because an inefficient market cannot be considered efficient.

When a Market Is Not in Equilibrium